The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of CIT Group Inc. (NYSE:CIT).
CIT Group Inc. (NYSE:CIT) was in 37 hedge funds’ portfolios at the end of March. CIT investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 35 hedge funds in our database with CIT positions at the end of the previous quarter. Our calculations also showed that CIT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the fresh hedge fund action surrounding CIT Group Inc. (NYSE:CIT).
How have hedgies been trading CIT Group Inc. (NYSE:CIT)?
At Q1’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CIT over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC has the number one position in CIT Group Inc. (NYSE:CIT), worth close to $119 million, amounting to 1.7% of its total 13F portfolio. The second most bullish fund manager is Anthony Bozza of Lakewood Capital Management, with a $43.7 million position; the fund has 2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Birch Run Capital allocated the biggest weight to CIT Group Inc. (NYSE:CIT), around 3.71% of its 13F portfolio. MSDC Management is also relatively very bullish on the stock, designating 3.13 percent of its 13F equity portfolio to CIT.
As aggregate interest increased, specific money managers were breaking ground themselves. MSDC Management, managed by Marc Lisker, Glenn Fuhrman and John Phelan, initiated the largest position in CIT Group Inc. (NYSE:CIT). MSDC Management had $11.6 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $7.8 million investment in the stock during the quarter. The other funds with brand new CIT positions are Dmitry Balyasny’s Balyasny Asset Management, David Rosen’s Rubric Capital Management, and Jim Roumell’s Roumell Asset Management.
Let’s go over hedge fund activity in other stocks similar to CIT Group Inc. (NYSE:CIT). We will take a look at YETI Holdings, Inc. (NYSE:YETI), Artisan Partners Asset Management Inc (NYSE:APAM), Fate Therapeutics Inc (NASDAQ:FATE), and Golub Capital BDC Inc (NASDAQ:GBDC). This group of stocks’ market valuations resemble CIT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $315 million in CIT’s case. Fate Therapeutics Inc (NASDAQ:FATE) is the most popular stock in this table. On the other hand Golub Capital BDC Inc (NASDAQ:GBDC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks CIT Group Inc. (NYSE:CIT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately CIT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CIT were disappointed as the stock returned 7.6% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.